LONDON (Reuters) - European stocks edged toward 22 month highs on Wednesday, driven by upbeat corporate earnings, an easing in fears about the U.S. hitting its debt ceiling and a better outlook for the global economy.

Strong investor confidence data from Germany, Japan's plans to shore up the world's third largest economy, and improving economic numbers this month from the world's top two economies, the U.S. and China, have all cheered investors.

European Central Bank chief Mario Draghi added his weight to the brighter outlook saying, in a speech in Frankfurt, that "the darkest clouds over the euro area subsided" in 2012.

"The sense of panic experienced in the financial system at times over the last few years looks unlikely to return," said Nick Kounis, head of macro economic research at ABN AMRO.

"We expect global growth to improve gradually this year before gaining strength next year," he said.

After a rally on Wall Street, which saw the widely watched Standard & Poor's 500 index hit a fresh five-year closing high, Europe's main share markets all opened higher.

The FTSE Eurofirst 300 index of top European shares rose 0.1 percent to 1,166.83 While London's FTSE 100 , Paris's CAC-40 and Frankfurt's DAX open as much as 0.3 percent higher.

Earnings from likes of tech firms Google and IBM were supporting the gains along with news that BHP Billiton , the world's biggest mining company, had boosted its iron ore output in the December quarter.

However, a slight retreat in Asian shares after they had hit 17-1/2 month highs left the MSCI world equity index just below the fresh 20-month peak of 352.54 hit on Tuesday.

In the debt market German Bund futures edged higher at Wednesday's open however traders said the gains were unlikely to be sustained with investors still upbeat about higher-yielding euro zone bonds.

Yields fell across the euro zone debt market on Tuesday after Spain sold a new 10-year bond that drew massive demand from foreign investors.

Sentiment is also expected to improve as Republican leaders in the U.S. House of Representatives said they aim to pass on Wednesday a nearly four-month extension of the U.S. debt limit to May 19.

Meanwhile the yen held firm against the dollar and the euro as monetary easing announced on Tuesday by the Bank of Japan failed to provide an immediate a stimulus as some had hoped.

The BOJ doubled its inflation target to 2 percent and adopted an open-ended commitment to buy assets starting in 2014, sparking an unwinding of yen short positions from speculators looking for more immediate easing steps.

The dollar fell 0.4 percent to 88.30 yen while the euro slid 0.8 percent to 117.42 yen. The dollar hit a 2-1/2-year high of 90.25 yen on Monday.